Natural Gas News and Tips
What Factors Effect Natural Gas Prices?
Because it is a publicly traded commodity, the price of natural gas, like other fuels, is influenced by the market forces of supply and demand.
Supply
Production
While natural gas production is growing, it has not kept pace with rising demand, resulting in dramatic price fluctuations over the last 5 years.Storage
Storage level refers to the amount of natural gas kept underground or in above-ground storage containers. National storage levels are currently at record-high levels.Other
Events like hurricanes, crude oil prices, and infrastructure problems can affect the ability to produce and transport natural gas. For example, in 2005 Hurricane Katrina affected production in the Gulf, where approximately 20 percent of U.S. production occurs.Demand
Weather
The factor that has the greatest impact on natural gas prices is national weather. If winter temperatures are colder than normal, demand increases and will most likely cause an increase in natural gas prices. While Georgia does not experience winters that make a large impact on energy use, prices are affected by weather in large population centers, especially in the eastern United States where usage is especially high in the winter months. No matter where you live, cold weather has the greatest impact on your bill amount because it determines how much gas you use each month: The colder the weather, the greater the usage.However, natural gas is increasingly being used to generage electricity. During warmer-than-normal summers, power plants operators tend to buy larger volumes of natural gas in order to power air conditioning. The increased cooling-related demand also pushes wholesale natural gas prices up.
